What do methods of handling risk include?

Methods of handling risk are strategies that individuals and organizations can employ to manage uncertainties associated with potential losses. The correct answer highlights three essential approaches: avoidance, loss control, and retention.

Avoidance involves entirely eliminating the risk by not engaging in activities that could lead to loss. For example, a company may choose not to enter a volatile market to avoid potential financial losses.

Loss control focuses on reducing the likelihood or impact of losses when they do occur. This can take the form of safety measures, training programs, or regular inspections to minimize the risks associated with certain activities.

Retention refers to accepting the risk and potentially setting aside resources to cover any losses that might arise. Organizations may decide that the cost of preventing a risk is higher than the potential loss itself, thus choosing to retain the risk.

Each of these methods plays a crucial role in a comprehensive risk management strategy, allowing businesses and individuals to proactively deal with potential uncertainties in a way that aligns with their objectives and resources. The inclusion of all three methods in the correct answer reflects a holistic approach to risk management that goes beyond just avoidance and insurance.